Adam Law Group Blog

What to Know Before Filing for Bankruptcy

 

Life is hectic. If you find yourself unable to face some of the debts that you owe, remember that you are not alone. For many people, filing for bankruptcy can offer substantial relief and a second opportunity to rebuild credit. While a bankruptcy lawyer can handle the legal issues involved with your case, it can also help to understand some important facts about bankruptcy before you begin the process.

Who is Eligible to File for Bankruptcy?

Anyone who can demonstrate that he or she is unable to repay his or her debts can file for bankruptcy. The rules that determine eligibility for bankruptcy in the United States, however, change based on the type of bankruptcy that a person would like to pursue. These laws also change based on where a person lives. 

As a result, it is critical to research both the type of bankruptcy chapter you are interested in filing as well as local bankruptcy laws.

Bankruptcy Lawyers can Provide Important Assistance

To declare bankruptcy, it is necessary to file paperwork with the court as well as with any lenders. While it is possible to pursue bankruptcy on your own, this requires a substantial amount of research to make sure that you satisfactorily pass each step. 

Conversely, retaining a bankruptcy lawyer makes sure that you complete each phase of the bankruptcy process as cost-effectively and quickly as possible. Retaining a bankruptcy lawyer during this time also means that you have an expert on hand who can answer various questions about the bankruptcy process.

The Costs Associated with Bankruptcy

Filing for bankruptcy costs a person on average between $1,500 to $4,000. While this might seem like a lot when you cannot repay existing debts, it is important to remember that this amount will give you the ability to complete proceedings and to restore your credit. 

As a result, you should avoid hiring a bankruptcy lawyer solely based on cost. Saving a small amount on bankruptcy now often means compromising the results that you see later.

Bankruptcy Slightly Impacts Your Credit Score

Pursuing bankruptcy will show up on your credit history for several years and can temporarily disrupt your credit. 

Afterward, however, people discover that if they utilize proper credit techniques, they are given a full and second chance at having a strong credit history.

The Differences Between the Types of Bankruptcy

There are several types of bankruptcy that a person has to choose from. Chapter 7 bankruptcy does not include any type of debt reorganization and instead requires the entity filing for bankruptcy to sell off any assets they own to pay off lenders. 

Chapter 11 bankruptcy or rehabilitation bankruptcy, however, allows the reorganization of debt by altering the terms of a loan. 

Speak with an Experienced Bankruptcy Lawyer

Bankruptcy is one of the most complex bodies of law in the United States, which is why it can help to speak with an experienced bankruptcy attorney. 

Contact the Adam Law Group today to schedule a free initial consultation.